IKEA: No deep business contacts with Cuban suppliers

Furniture giant IKEA did not know about the possible use of Cuban prison labor to manufacture goods for its stores and did not have a long-term business relation with suppliers on the island, investigators announced Friday.

The Swedish company issued an apology after an audit by the Ernst & Young firm confirmed reports that some suppliers used forced prison labor, including many political dissidents, in communist-ruled East Germany in the 1980s.

“We deeply regret that this could happen,” in East Germany, manager Jeanette Skjelmose said in a statement. “The use of political prisoners for manufacturing was at no point accepted.”

But the Ernst & Young report noted that IKEA “never had any long-term business relations with suppliers in Cuba and … there is no evidence that [the company] was aware of the possible use of political prisoners in Cuba” to manufacture its products.

The auditors found that 71 sofa suites — a sofa and two matching chairs — were produced in Cuba as samples for the Swedish company and at least one set was sent to the former East Germany for quality inspection by company officials, the report added.

“The furniture did not meet quality requirements,” noted the report, released in Berlin on Friday. “There is no evidence that the IKEA Group received other products produced in Cuba.”

News reports earlier this year showed IKEA officials in West Germany contracted East German state companies that used prison labor to manufacture some of its products in the 1980s. The East Germans in turn explored hiring Cuban government enterprises that use prison labor to manufacture some products for the Swedish firm.

The Cuban enterprises have been identified as EMIAT and PROVARI, both run by the Interior Ministry, in charge of the island’s prisons. PROVARI runs prison manufacturing plants, and EMIAT commercializes the products.

A Cuban government radio report on PROVARI’s work in 2011 said it was established 20 years before “principally with the objective of offering work to prisoners . . . and integrating them into work useful for society.”

Rainer Wagner, head of a group of victims of East Germany’s communist government, told a news conference in Berlin on Friday that he hoped the furniture company would consider compensating former prisoners for their forced labor.

IKEA said only that it would make a “financial contribution” to Wagner’s group for its “scientific research project on forced labor” in East Germany, which officially disbanded after the collapsed of the Berlin wall in 1989.

East Germany desperately needed hard currency to support its Soviet-style economy in the 1980s, and its prison labor is estimated to have cost a tenth of what it would have cost in the West, according to one Associated Press report.

Many countries, including the United States, use prison labor. But there’s concern that dictatorships can too easily abuse their prisoners.

Ernst & Young said its investigators examined about 20,000 pages of IKEA documents and 80,000 items in official German archives. They also interviewed about 90 active and retired IKEA employees and witnesses from East Germany.

The furniture firm hired the auditors in May to carry out an independent audit of its East German and Cuba connections, and IKEA U.S. President Michael Ward met with Cuban Americans in the U.S. Congress in June to assure them the inquiry was a priority.

“I commend IKEA’s serious investigation into its past contacts with the brutal, oppressive Castro dictatorship,” said Rep. Mario Diaz-Balart, R-Miami. “Other businesses with objectionable past behavior or shameful business relationships should take note that facing the truth is better than attempting to bury it.”

Rep. Ileana Ros-Lehtinen, R-Miami., added that the IKEA case shows “companies, not just dictators, that if they engage in these acts they will be held accountable.”